Dairy businesses diversify products to beat competition

LAHORE: Dairy businesses have greatly diversified their products range since 2007 as they are now also focusing on multiple dairy products instead of just packaged milk, the industry data suggested on Saturday.
Dairy processors are selling a number of products from skimmed milk powder, whey powder and whitener to beverages. The ultra-high temperature (UHT) market, which was solely comprised of plain white milk in 2006, has seen a transitional change in favour of dairy liquids and non-dairy products.
Most importantly, the data showed that the share of plain white milk in UHT market has reduced to even a level achieved in 2008. The dairy liquids are slowly gaining share in the UHT products. Sales of dairy liquids and tea-whitener are gaining momentum, to have held 60 percent share in the UHT market.
There has been an impressive growth in the overall sale of UHT products over the years but the share of milk is dwindling at a quite fast pace. The raw milk produced by local dairy farmers is largely substituted by the imported raw materials, such as skimmed milk powder, whey powder and vegetable fat.
An estimate said the sale of recipe products – made of skimmed milk powder, whey powder – was equivalent to 630 million liters in total UHT sales while plain white milk was approximately 470 million liters in 2014. Industry officials said since these ‘recipe products’ are made of vegetable fats for dairy processor the cost of production of these products is far below the raw milk prices, which ultimately deprive millions of Pakistani dairy farmers of appropriate price for their raw milk.
Share of UHT milk stood at 440 million litres in 2006 while it increased to 446 million litres in 2007. However, the trend of introducing UHT tea whitener and dairy liquids also initiated in the same year. In 2007, UHT products processors managed to sell 13 million liters of tea whitener and 2.8 million litres of dairy liquids.
In 2008, share of UHT milk was recorded at 550 million litres while tea whitener sales jumped to 86.5 million liters, showing over six times growth over the previous year level. Almost same was the case with sales of dairy liquids that escalated to 13.6 million litres.
In 2009, share of UHT milk reduced to 488 million litres, showing negative growth for the first time in the history of Pakistan. Contrary to this, the sale of tea whitener soared to 190 million litres, breaking previous year’s gains with an impressive growth rate.
Dairy liquids share also climbed to 28.1 million litres in the same year.
In 2010, sale of UHT milk showed marginal increase of two million litres to 490 million litres, while share of tea whitener and dairy liquids grew to 302 million litres and 38.1 million litres, respectively. In 2011, share of UHT milk again exhibited a little increase of two million litres to 492 million litres, while the sale of tea whitener and dairy liquids was expanded to 367 million litres and 42.8 million litres, respectively.
In 2012, share of UHT milk saw a decline of 20 million litres in sales if compared with the volumes of the previous year. On the other hand, share of tea whitener and dairy liquids continued to increase by leaps and bounds as it swelled to 524 million litres and 50.2 million litres, respectively.
In 2013, sale of UHT milk further dropped around 20 million litres to 451 million litres as compared to the preceding year, while in sheer contrast, sale of tea whitener and dairy liquids climbed to 540 million litres and 63.4 million litres, respectively.
The officials said dairy processors use recipe products to have an edge over competitors. Recipe products are projected very aggressively in media, while not mentioning them as milk but something better than milk, they added.